Readers' comments

All this talk about technology as a root cause, perhaps that's part of it, but that's not limited to the past five years. How about a diminishing intellectual capital gap and a widening cost of labor? Labor markets are remarkably efficient, and as Chinese labor prices inflate, the supply will come from further west and south. Unless the US educational system dramatically improves and increases the value proposition of the US worker, why would we expect this trend to change, if not worsen?

This has been a fear since the Luddites broke up weaving machines in the 17th century. Those fears have never been realized for a couple of reasons.

1) Someone has to make the robots.

2) Robots replace humans only if they cost less. Those costs savings are passed on to the consumer because competition forces prices down. Also, producers must reduce prices in order to persuade more consumers to buy the product. Lower prices increase the wealth of consumers, which they spend good or services for which they didn't didn't buy before because they didn't have the money. In other words, lower prices for necessities expands demand for non-necessities, or what used to be considered luxuries.

I know this argument is as old as the hills, I read Economics in One Lesson but we are in a very interesting period in history right now, unprecedented in my opinion.

1. Robots will be making the robots and I don't think it's even far fetched to assume one day robots will be designing robots. Machines are beating humans at chess and poker, whats next?

2. New methods of production such as 3d printing and nanotechnology will one day mean the cost of manufacturing a product is the same as the cost of the inputs, or close. I just read an article on the Economist the other day about mechanical lettuce pickers that are cheaper and more efficient than human labour, I am expecting a lot more examples in the near future.

I am not saying this will necessarily be a bad thing, but it is going to turn society on its head that's for sure.

I see the issue popping up more and more because of the group at the Santa Fe Institute that sees is as a threat and is dedicated to solving what they see as a problem. But I think it just shows their lack of understanding of economics.

The history of Western civilization has been the increase in production/and consumption by employing more capital. Robots are just more and better capital. If robots produced everything, then costs would have shrunk to almost zero because we would have an unlimited supply of everything. Of course, that can’t happen because, if for no other reason, we have a limited supply of natural resources and food.

I wish we could eventually get to the place where all manual labor, and much of the intellectual labor, was done by robots. That would mean that all of humanity was incredibly wealthy. Marx’s dream would finally come true, but via capitalism.
If machines produced all goods and most services, what would humans do? The path of the US economy over the past generation gives a clue: we have devoted larger shares of our income to heath improvement, education and entertainment. If robots produced everything, then humans would spend all of their income on those three things.

Remember that as we become wealthier as a result of the greater and better use of capital equipment, like robots, things that used to be luxuries become necessities. The greatest luxury of all is time. If we didn’t have to work, we would spend our time educating, healing, and entertaining each other. That was Keynes’ dream, too, but it can only happen with greater investment in capital equipment (such as robots) by private businesses. It will never happen with government directed investment as Keynes thought.

Not sure I agree with the rosiness of your view. People spend an awful lot of time and money on war. Often these wars are over economic concerns, but also often, they are ideological. One would hope that education would somehow address the issue of Arab vs. Jew, Catholic vs Protestant or Sunni vs Shiite, but I'm not holding my breath!

Thanks for the link to Krugman’s article. That is the worst article I have seen him write. Everything in this article contradicts sound economics. Each year, Krugman puts more distance between himself and economics while embracing Marxism more fully.

Krugman: “The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down.”

That paragraph alone proves how little Krugman understands about economics. He should read George Reisman’s book “Capitalism”. It’s available in pdf online. Reisman explains what drives profits very simply: profits rise when business owners quit investing. Investment is an expense; it reduces profits in the short run in order to produce greater profits in the longer run.

Profits and unemployment are high because business owners refuse to invest in this environment. We need to pay attention to why business owners are not investing.

Krugman: “About the robots: there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds.”

Krugman is channeling Ned Ludd. Who builds the robots, Paul? And robots only replace humans if they are cheaper, which makes the products they make cheaper and therefore makes everyone who buys them wealthier than they would be with the human labor making the items.

Krugman: “Still, can innovation and progress really hurt large numbers of workers, maybe even workers in general? I often encounter assertions that this can’t happen. But the truth is that it can…”

Yes, in the short run technology hurts the workers it replaces. No one has ever denied that. In the long run it makes everyone wealthier. Good economists look at the long run and the total effects, not just the immediate short run effects. There is no way to grow wealthier except through better technology, even robots.

Krugman: “…that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.”

Why would concentration require fewer workers? All else being equal, keeping the same amount of production requires the same number of workers. Otherwise, we’re back to the technology argument.

Few economists worry about monopolies because they have looked around and noticed that the only true monopolies are those created by the state. If the state would quit creating monopolies, we would have no problem with monopolies.

In addition, as Krugman has notices in banks that are too big to fail, the larger businesses become the harder they are to manage well and they fall victim to smaller, smarter businesses.

I'm pessimistic about the future. I was merely responding to fears of robots doing all the work. I don't think that will ever be possible, but if it could happen we would have discovered utopia.

Robots won't produce everything in the future because that would require huge amounts of investment. Only free economies cna produce the wealth necessary for such investments and the world is headed toward greater socialism. As we become poorer, more and more work will be done by humans because no one can afford to build the robots to do it.

A healthy financial system is important for economic growth and well being, matching savers with those who want to invest and providing options for future income. Are there proposals to end too-big-to-fail policy, encouraging competition and credit availability? Is regulation focused on safety alone or a balance between growth and safety? What do you think?

Dismal forecast but I'm putting my money on Royal Dutch Shell chief executive Peter Voser, who predicts a veritable revolution for the US economy as the country becomes energy self-sufficient. Recently, he told Sarah Montague on BBC Hardtalk that as new oil discoveries and shale gas comes on stream, jobs will move back to the US from abroad and manufacturing costs will be lower than in China.
God willing, he be as good a prophet as he is an oil executive!

The International Energy Agency’s World Energy Outlook 2012 report says that, “by around 2020, the United States is projected to become the largest global oil producer,” overtaking Saudi Arabia and allowing it to become a net oil exporter by 2030.

It's not so far fetched to imagine the U.S. as an oil exporter once again. Unfortunately it may be more a case like Nigeria where oil is exported while large swaths of domestic consumers go without it for lack of purchasing power relative to foreign consumers...

Keynes is considered the father of modern economics because he had a huge part in the recovery from the great depression. The bottom line that Kenyes promoted was that we need to spend money to make the economy work, this is why the huge government projects and the industry brought by WWII had a huge part in pushing America in the prosperity it experienced during the !950's and 1960's. The economy as highlighted in this article is still producing jobs, just not at the accelerated rate we want; the war and government works is what made the economy grow at an execrated rate during the 1940's. Our administration should be looking to create projects that boost our economy so we can see growth at the rate we want and or need. Obama has put some work into promoting the growth of the economy with the numerous road improvement projects, bringing new jobs, industry, and employing the ideals of the money multiplying effect. However we should be working to streamline projects like high sped rail and public transportation that have longevity for our economy, brining jobs and investing in towns along the new rail line. we should hope that over the next four years of this administration we see large scale public works projects that will spur our economy over the long run.
Lawrence C. for ECON 2411

Since the “Great Recession” has started, unemployment has been a major topic of conversation. Many economic problems in some way involve unemployment and unemployment during the recession has been the highest it has been since the Great Depression. As stated in “America’s latest employment report”, the economy “is still producing jobs at a steady pace – a pace that is excruciatingly slow.” During the recession households have been buying less of things due to their income being lower than usual and people hold onto their money and economic growth does not happen due to the economic state. Because of this, it was very hard to stop the unemployment rate from going up. With unemployment especially, where there is uncertainty about a person’s wealth in the future, they hold onto their money in case of unemployment. As we learned in class, John Maynard Keynes is known as the father of economics and talked a lot about unemployment. During times of high unemployment, Keynes would recommend an increase in the money supply through expansionary monetary policy. Increasing the money supply through this would decrease interest rates and unemployment, along with increasing things such as spending and prices and output. Also, according to the blog, citizens and policymakers should not be okay with how slowly the labour market is turning around and that there are points that show it has not really turned around at all. These points include the “number of people who are not being counted as unemployed but who want a job now” and also the “number of people who are working part-time because they could not find full-time work”. I find this very important especially because these numbers have no declined and it is a good indicator that things still have a very long way to go in terms of turning the labour market around and really get out of the recession. Throughout the semester, we also constantly compared the Great Depression and the recession that is currently going on and in Mishkin it says how, “During the Great Depression of the 1930s, aggregate output fell precipitously, by 30%, with unemployment rising to 25%. Although the recession of 2007-2009 was not as severe, the contraction in economic activity led to unemployment rising to over 10%.” It was then discussed how Keynes theory of aggregate demand explains the Great Depression and could be linked to things during the recession. It is clear that more needs to be done for things to get back the way they were before the recession and that nobody should be okay with how things are. Everyone should want things to change as quickly as possible and for things to keep moving in the right direction.

We have learned a lot about economics since Keynes and have found that his suggestions don’t work. I doubt that your class discussed the stagflation of the 1970’s because that is when most economists abandoned Keynes. Also, Keynes’ solutions have been tried during this recession and they have failed. Of course, neo-Keynesians will claim that things would have been worse, but they don’t know that. There is no way they can know that.

In fact, it’s more likely that things would have gone better. In the recessions before 1929 the economy recovered much more quickly without any credit expansion or government spending.

Crises like the present one always come due to excessive credit being devoted to malinvestment (defined, roughly, as investments that in aggregate fail to generate enough additional value--either through asset productivity or asset appreciation--to cover repayment of the credit). And they heal only when the obligations and the collateral are brought closer to balance.

In the case of residential housing, a largely consumption item that produces very little on its own, the cure will have more to do with foreclosure and credit destruction than it will reflating housing prices or getting broad-based employment/wage gains. Pushing up housing prices absent robust demand is self-defeating because it can only be done through broad inflation. Bringing back jobs will be tough because we're trying to replace the production of consumption items (which are not self-reinforcing job creators - they're more like square wheels) with the production of tradeable goods/services for which there is a lot of global competition these days. The better alternative is to promote jobs incidental to capital investment. Arguments for government stimulus ring hollow because even when the Keynesians get what they want, very little of the money goes into capital investments. Mostly it's just a sop to more waste/consumption--deepening the problem.

The longer we postpone the painful but inevitable 'cure' the more we drift and the more unfairly-inflicted will be the pain.

Was not WWII in effect a second Keynesian stimulus but of the proper size? Isn't that what spurred the economy past the war? Wasn't that economic cause and effect, the real reason we attacked Iraq? How the hell would we have otherwise employed all those soldiers in our, hanging by a thread, economy?

That is popular economics, but not true. Yes, you can reduce unemployment by drafting all of the unemployed and killing 200,000 of them in combat, but it's not the typical way we want to do things.

We could accomplish the same thing today if we built tens of thousands of airplanes, tanks and ships and then destroyed them all. But we would not be wealthier. People would be employed, but we would all be poorer, just as WWII made us poorer.

WWII left the government with a huge debt that required what Rogoff calls financial repression for two generations to pay down.

Anyway, WWII is a very poor example because the government enforced price controls and rationing to keep inflation from spiraling out of control.

So no, WWII did not end the depression. Time had more to do with it than anything. From 1937 to 1945 Americans saved a lot; the population grew; and malinvestment from the 20's was liquidated. That's what ended the Great D.

Besides, the US endured about three dozen recessions before the Great D and recovered very quickly without state stimuli or money pumping.

Of course its not "the way we want to do things"; but to say it didn't have the effect of creating high money velocity to the point of needing inflation control e.g. positive economic impact, (which has been misunderstood as a causal good thing) is like looking in the mirror and saying, "No that isn't me." It had that effect.

Historians and Economists alike have filled the shelves with the observations of the economic and political strength of THE MILITARY INDUSTRIAL COMPLEX and to deny it is to ignore the nakedness of the king.

Hoping to be summarily clear: Are you saying there should be perfect investment or else none? I agree there is much wasteful use of re-invested savings, but that seems to be the only way to have the opportunity to get the time to educate the consumers for their own good. Otherwise they will die out and the overcapacity to produce will have become even greater wasteful investment.

I agree with the dry economic assessment you posit. I am trying to bring the reality of the common consumer's inability to understand as well as the inability of the sophisticated to teach, as another factor to your analysis; if that makes any sense? Assuming WE are all in the same boat, so to speak.

I completely disagree that war has any positive long run economic effects. Yes, it increased gdp for a short time. Hitler did the same thing. But good economists look at the long run effects, not just the immediate ones.

The point is that creating jobs is trivial. The USSR had no unemployment in its 70 year history, but its people were desperately poor when it collapsed.

If people focus only on the short run, then it's easy to fool them into thinking you can turn lead into gold.

How do you know that the economy didn't recover in spite of WWII? You think WWII ended the Great D because popular history books and the media tell you it did. But goosing gdp for a few years through wasteful spending isn't the same thing as ending a depression. It only disguises the depression and fools the gullible.

Depression end, as they always did, when the private sector grows and produces useful things, not when the government wastes vast amounts of savings just to goose the gdp figures.

Before the Great D, the US recovered from about three dozen depressions, one as severe at the Great D in terms of reduction in output. The economy recovered from every one of those much more quickly than it did the Great D without monetary or fiscal stimuli. That means economies have a natural recovery mechanism. So how do you know that those natural processes didn’t cause the recovery instead of WWII? In other words, would the US economy have recovered without WWII? The answer from history is absolutely.

I did not mention war anywhere in the comment you seem to be replying to. Your comment is irrelevant and fundamentally wrong. When Rosie the Riveter could afford a Ford, she set off a multiplier economic effect that lasted many years. However to be clear, I am not advocating that war is "good" for any economy. I am trying to make the parallel comparison that: like a Keynesian intervention of the right size, a war can have a similar long term economic boost. They are both central planning and as such politically questionable I agree. The only other choice was clearly stated by Keynes e.g. "put the money in coffee cans and have the public dig them up!"

Obviously not all spending can be investment; nor can all investment pan out and provide returns above the cost of capital. Microeconomics will concern itself with individuals and companies and their personal outcomes. What I'm getting at is more about national (and world) aggregates--the net sum of what everyone is doing.

And in the last several decades the pendulum has swung too far to consumption vs investment, and not only that but the majority seems to have gotten delusional about what constitutes an investment (it isn't a heavily-mortgaged McMansion, many miles from existing infrastrucure and places of interest, often shoddily built to boot). Nor is the return from asset appreciation one we should collectively be counting on for the majority of our capital deployment--a fact made obvious of late.

As far as the headwinds of consumer naivete, if the government can help the counterintuitive but correct thing would be to stop incenting malinvestment in the first place--for example through tax incentives that encourage borrowing for housing (of which a good part is consumption). In a larger sense the government could back off of many subsidies generally; the most harmful fallacy affecting people is the notion that the government can/will take care of them. People are strong and resourceful when they need to be--which also ties into previous comments by fundy about the real reasons the Great Depression eventually lifted.

But Rose couldn’t afford a car during WWII because cars, rubber, steel, etc. were rationed. She saved her money. Had the state not enforced price controls, then prices would have risen to the point that Rosie’s income would have no purchasing power. She would have spent a week’s wages on a loaf of bread. As in the USSR before its collapse, the people had so much money they papered their apartment walls with it. Americans during WWII lived very hard lives due to the rationing and price controls.

The US could accomplish the same thing if it just borrowed money and gave every citizen $1 million each. Would we all be millionaires?

Keynesian economics says the state can prime the pump by spending $ trillions and once the momentum is high enough the private sector will take over. But history, and sound economics, demonstrates that once the pump priming ends the economy tanks again. That’s why most economists have abandoned Keynes. The theory works well in the imagination; it just has a very hard time with reality.

The only sustainable recoveries are those made by the private sector acting without fiscal and monetary stimuli.

In the five-month period since June, the number of people employed by government increased by 621,000 to 20,559,000. These 621,000 new government jobs created in the last five months equal 73.3 percent of the 847,000 new jobs created overall.

Hey! I have an idea - let's raise taxes in order to hire more government bureaucrats. That'll solve our unemployment problem lickity-split. Yet another reason to not believe headlines from the Obama administration regarding unemployment numbers.

After read the article, I think of the similar situation in china. In fact, the 2008 economic crisis brought impact to the vast majority of countries in the world, but some suffer more and some suffer less.
The crisis also impacts the economic of china, such as domestic financial, export trade, investment demand and the real estate market. After the crisis, because of the reduced demand and decline in export volume, a lot of manufactories discontinued or reduced. It lead to some people be forced to out of employ, especially the Peasant-worker. They had to go back to home. The government made some policies to encourage them to carve out in their hometown and provided free vocational training. It promoted the employment rate and stable social order in a way. Lots of idle hands got jobs and happy life. But, there were also some people be unemployed. It fully demonstrated what a big impact the crisis had brought.
Obviously, America suffers more in the crisis and recession. The chart shows us that the number of people who would have been employed full-time job would keep rising if job has grown at 0.9% annually. Manage to provide more job opportunity is important to promote employment rate.
We can see from the second chart, the employment level-55 years and over is always higher than the employment level-25 to 54years and keep rising, but the employment level-25 to 54 years keep declining. The youth unemployment is more serious and the old can’t enjoy their twilight years. To resolve the employment, America needs more time and ways.people should believe themselves and their strong government.

Minor detail: Much as I hate to say it, mom and dad (or grandma and grandpa, depending on which generation we're talking to) will in fact continue onwards past 55 and die one day. In other words, our largest "knot" of workers in the US is increasingly entering their last work period before medical necessity catches up with them.

In short, your point about the demographics shifting towards the boomers aging actually should give you MORE reason to worry, not less. Because there's increasingly less chance that we'll balance our books before they all retire, they all join the AARP, and they all demand we give them 10x the money that they put into the system, just like their parents and their parents' parents did. Except, unlike those, they'll be the first generation yelling at a smaller group of young whipper-snappers to go out there and work.

In fairness, a lot of the Boomers wealth will be also be expropriated via the 'inflation tax' to pay for their programs. And they'll not be immune to the cost of living outpacing investment returns (just as the younger generations will likely continue to experience real wage decline).

On the bright side of this, when there's enough broad-based pain and no more roads down which to kick cans, those who have been in denial may finally come to the table for objective bargaining about the proper role of the state.

And the good thing about being young and jobless/assetless is that it opens up options that aren't peceived as viable for folks who think they have more to lose by taking risks or radical paths through life. Change is constant; the lesson to learn is that virtue and values are timeless. People were and are quite content with a lot less than we've been accustomed to of late.

Good points all, though I'd point out that the Boomers at least had the sheer numbers to change laws for...well, the last several decades...if they'd so chosen. They could get themselves out of this mess. Until the Boomers die off, my generation's going to be held hostage by the AARP.

That, and I'd hoped we were already going to have that "real conversation" in this previous election: unfortunately people won't understand the concept of balancing a book until food stamps are taken out of that book, it seems.

For 30 years, we have had a labor market in which labor is at a disadvantage, as shown by the gradual downward track of wages relative to inflation. Far from being a tragedy, this has been considered a success. Particularly for those whose compensation is set in "negotiations" with their peers rather than in anything like a free labor market, top executives and unionized public employees. A certain amount of unemployment is needed to keep wages going down.

Meanwhile, the Federal Reserve has found it necessary to slash interest rates to prevent decreases in paper asset prices. That too has been more or less successful, as the stock market remains overvalued relative to earnings and (especially) dividends.

If The Economist wants to decide this is a problem, perhaps it is time to discuss who has benefitted from it.

Moreover, just remember the consensus that the only people who should lose federal old age benefits are those under age 55, because they have "time to adjust." The difference in employment is small compared with the difference in wage income at similar ages.

So, vote for the people who will keep it at it 55 until you hit 55,
or vote for the people who know that Social Security did not cause the debt to rise.

If you were 18 and working in 1982 or earlier, you took a hit under the 1983 Social Security reform. That puts that worker at 48 today.
--
Speaking of retiring, most people put more each month into their cableTV and cellphone bills than into a 401(k).

And we might see a significant change in WHEN companies award the matching funds.
-- IBM shifts 401(k) policy to once-a-year matches
By Mark Jewell and Steve Rothwell, AP Business Writers

Excerpts:
IBM is making changes to its employee benefits that may cause other large corporations to follow suit. The technology company will begin making contributions to employees' 401(k) accounts in lump-sum annual payments, rather than at the time of each paycheck. It's a move that will help the company cut retirement plan expenses.

Employees were notified this week that matching contributions will be made just once annually, on Dec. 31, beginning next year

About 7 percent of employers offering 401(k)s make contributions once a year, benefits consultant Mercer estimates. About 88 percent make contributions each pay period, with a smaller number using monthly or quarterly distribution schedules.

Aon Hewitt estimates that employees will typically need a retirement fund worth 11 times their annual end-of-career pay, beyond Social Security, to cover their needs when they stop working. Currently though, Americans are on track to accumulate funds worth only 8.8 times their final salaries...
--
NPWFTL
Regards

Absolutely. But dozens of times per day, as they sat in their chairs watching television, they got the opposite message.

Most companies have eliminated the matches. The only advantage of saving through your employer rather than saving on your own is the government bribes you to do so with a tax break. And then the employer gets to negotiate the fees with the financial company. Somewhere in some company, I'll get there are kickbacks on that one.

Oh, by the way, spending is plunging for younger generations. They have cell phones, but they have eliminated category of spending number one and number two, the house and the car.

This is considered an economic disaster. There have been a series of public policies to borrow money younger generations will have to pay back to make them buy houses and cars -- cash for clunkers, a homebuyer tax credit that temporarily inflated the cost of housing, etc.

Not only have many companies already moved to a lump-sum match, but often the vesting/payout date is well into the following year--meaning that for job-hoppers they're guaranteed to forfeit some of the match they've 'earned' no matter when they depart the company. Not that I have any problem with employers structuring benefits to encourage retention. Annual bonuses have commonly been set up in similar fashion. But it does further explain why wages are stickier to the downside and workers have been less effective in flexing their own market power.

That's the problem with printing Minsky. For a season the housing Minsky employed a few people building/selling McMansions. Now unemployment is to the moon, courtesy of printing misallocating capital into oblivion.

Empty McMansions don't employ people. Without printing, factories would have been build instead of pointless Keynesian pyramids, and citizens would be employed now.

Minsky makes some interesting points. His Ponzi financing phase of credit seems to be the norm today. The result of banks printing way too much credit. The bank plan to double credit every decade is unsustainable in the long run, and counter productive when debt to GDP exceeds 90%.

Well said oneofthepeople. If we were serious about keeping our economic, political and military pole positions, we'd deprioritize housing and move to modest insulated concrete domes or whatever is the most efficient way to spare ourselves from the natural and human elements, and put all of our surplus into efficient state-of-the-art production capital and R&D. Likewise, cars that weigh 10-20 times the cargo they carry would be replaced with mass transit and lightweight (perhaps human powered) vehicles, and we'd figure out how to replace meat with something just as delicious but ecologically sustainable. At some point far down the road we might reconsider eugenics.

But hey as my parents reminded me growing up, nobody would like us if we were perfect...

This makes me think of Dale Mortensen's(the Nobel Prize winner) presentation at Melbourne University in early July. He showed a nice graph (as he would) that showed past unemployment levels falling as the US economy boomed and rising as it contracted. Then the puzzle of the current rebound... stubbornly unemployment... or only sluggish improvement... Something is different this time around... Someone in the audience asked whether Americans were refusing to work for less... after all unemployment benefits are higher than before... Another explanation might be that people are simply unable to access the job opportunities because they cannot leave their homes(read mortgages). We Europeans think of the US labour market as flexible... perhaps now that the world is flat its less flexible than we thought. Higher productivity appears to be the only way out of this mess. US corporates have obsessed about cutting labour costs and yet spent relatively little on training in recent decades... According to the economist (current edition) the bulk of US tertiary education is missing its mark. Time is ripe for a revolution in market oriented training... just need some leadership from the corporate sector (think of the Germans)

Between November 2007 and November 2012 the number of people aged 20-24 not in the labor force increased by 500K. Those aged 24-29 not in the labor force increased by 1.2M. Hard to have a robust economy when so many of our young people think it's okay to live at others' expense.

The ones living at other people's expenses are the Medicare generation - America must raise eligibility ages for federal pensions, and ration healthcare subsidies far more tightly.

That aside, you have a point. While young people (unlike their parents) will be net taxpayers over their lifetime (on average), perhaps more of them should be working at an earlier age. Time then to slash tuition subsidies for universities/ college, and rapidly wind down student loan subsidies. If the same resources were ploughed into employment subsidies for young people, both the employment picture and America's overall fiscal position might look better (though the actual trade offs are not clear - they depend on the marginal returns & opportunity costs of traditional formal education).

I got my first job when I was 16. Far fewer teens work nowadays. The labor participation rate for those between 16-19 of age in 2000 was 52%. In the last BLS report, it was 32.7%. One can't blame the recession for the drop either, as much of it happened prior to the bubble bursting. The rate has already slipped to 41% at the peak of the business cycle in 2007. The subsequent drop seems to be a continuation of the trend. Indeed, one might think that on seeing mom and pop struggling financially, teenagers would try to help out. No such thing.

In the meantime, the participation rate for people 65 and over has jump from 12.9% in 2002 to 18.7%. The rate for those 75 and over went from 5.3% to 7.6%.

Well, it's hard to have an intelligent discussion with someone who doesn't understand the basic terms involved. A person not in the labor force is not unemployed. By definition, a person not in the labor force is not looking for a job. If you "quite a goddamned few" want to be employed, they should start by looking for a job. Of course, we know that in reality they do not want a job. The household survey asks this specific question. In November 2007, the number of people aged 16 to 24 not in the labor force and do not want a job now was 13,5 million. In last month's report, the figure was 15.8 million.

"By definition, a person not in the labor force is not looking for a job. "

According to who's definition of "not looking for a job"? You're equating an absolutely arbitrary definition (which is designed specifically to make the unemployment numbers look lower than they actually are) with "being unwilling to work".

The data is from the BLS current population survey. Do you know what a survey is? That's where we ask people questions and note their answers. In this case, the question goes as follows:

"Have you been looking for work during the last 4 weeks?"

If the respondent answers no, then he is not looking for a job. People are aware of what they've been doing, we would think. It's possible, I suppose, that people could be subconsciously looking for a job. But as the success rate of subconscious job searches is likely to be zero, from a policy standpoint I think we can safely ignore that.

The other question asked in the CPS is this:

"Do you currently want a job, either full or part time?"

If the respondent answers no, then we presume that he does not in fact want a job.

Frankly, you're making a stupid point. Rates of underemployment and unemployment for young people still haven't recovered from their peak recession spike. In your view, every recession is accompanied by works losing their work ethic and then recovering it again. I had no idea the Great Depression was caused purely by worker laziness.

The numbers for "not in labor force" also increase for middle aged workers. The recession has forced older people to attempt to re-enter the labor force and has forced some young people out of it (either to more schooling or through discouragement).

Also, according to FRED the definition of "not in labor force" INCLUDES individuals looking for work. Check your numbers.

The ones living at other people's expenses are the Medicare generation

And 30% of those expenditures are from people in their last year of life. In other words we are throwing money away on hopeless causes. We need to be keeping old sick people who are going to die anyway out of expensive medical care. The challenge for physicians to identify those who are too far gone. For politicians the challenge is to let nature take its course and not lose their nerve.

True - this is exactly the same in the UK, Italy, Spain, Greece and Germany.

A very large proportion of healthcare spending goes on people within a year of their death.

If we can find cheap and objective diagnostics for assessing with high probability that people are soon to die, and place those people into respite hospices rather than hospitals (trees, lakes, pets, proper food and family rather than drugs, nurses, hygiene, hospital food & frequent operating theatre appointments), we'd save hundreds of billions. (Equivalent to hospices, just let people spend their dying days at home.)

I don't really see why death panels are so politically controversial - isn't it obvious that if the same resources can have much bigger positive health impact elsewhere, they should be allocated elsewhere?

The second generation has been sold out "Big Time". Observe what the current generation "do" not what they "say". You think they care when each on their own. Many (second generation) have stopped being suckers to their needs.

Is something big brewing here? The Economist magazine has just been asked to explain why legal action should not be taken against the Economist magazine and its South Asian Editor for supposedly hacking into his e-mail communication with Dr
Ahmed Ziauddin, a Brussel based international law academic. Difficult to imagine that the economist itself has hacked - in the context of hacking controversy in UK. But perhaps Economist has been provided hacked material or maybe chairman's assumptions are entirely wrong. Have to wait and see - but Economist I think comes online tonight - so we may not have long to wait.

First this is nothing to do with security - but just harassment I am afraid. As someone just pointed out to me if the registrar were concerned about security, why don't they repair the metal detector at the entrance of the tribunal!! Secondly, I don't really understand your meaning of ' I don't [want] anything to spoil it'. The Sayedee trial is so problematic in my view it is effectively 'spoiled' as you put it - and that is the fault of decisions made by the tribunal/prosecutors etc. Thirdly As to your question of why I would want to 'expose the flaws of the trials in public' - I am journalist with a long interest in the tribunal, ever since I made a film about 1971 war crimes 15 years ago for British TV - and I am now simply recording what takes place at these tribunal. Do you not want me to to do that? Should everyone in Bangladesh ignore the reality of what is going on at these trials - simply because they want the jamaat convicted and hanged? The answer for many people particularly within the secular establishment (which of course I generally support myself) to that question is 'yes'. But it is not my answer. I would be writing the same thing if any other leader of any other political party was being prosecuted in these trials. It should NOT be be about who is being prosecuted - it should be about the integrity of the trial process.

I am getting kind of tired of seeing comparisons of "before the crash" Before the crash was the end of a bubble, one that was so poor it led to ... well a crash. comparing to an over stimulated economy that was full of over bloated credit is like comparing your height to before you came down from a jump.

Imagine that half the distance that we fell was bubble, which we will not get back, and should not try to get back. How are we doing at getting the other half back? Terrible, that's how we're doing. We fell a long way to a bottom, and we didn't bounce very much.

The only way that the numbers are any good is if 100% of the fall was bubble. But that's actually bad, too, because it means that where we are is as good as it's going to get. We now are where normal is.

There's not much way to make the numbers seem like good news except "well, it's better than last month". Which may be true, but it's pretty faint good news.

Workers 55-65 were born from 1947-1957, the peak post-war baby boom years. Would not this demographic significantly increase under any economic conditions ? I guess the point is that Boomers are crowding out younger workers in the absence of growth.

However, a similarly dangerous fallacy is the idea that it's okay for young people to remain unemployed for long periods of time because they are unemployable (Because no work experience), leading to a circular argument "I want a job, but I don't have the skill for anything but part time manual labor".
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Even with four year degrees or more people end up working minimum wage jobs simply because they have no experience, and entry-level positions often require experience these days.
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I even saw an advertisement for an internship... which required two years previous work experience. What the crapping fuck are they teaching HR these days?

In my own position, if I fail to find interesting paid work then I will create my own work (and create it for other people too).

I don't understand why anyone would want to work with a business that employs HR people - if bureaucracy has leached into even the recruitment & staff motivation side of the firm, then you can be guaranteed that productivity will be low (and the business will instead be dominated by rent extraction, zero sum bargaining & internal power politics).

Businesses should be dynamic & responsive in their management of resources, with focus on good real time metrics and real human relations, high quality of communications & complete internal transparency. Arbitrary rules, concentrations of information and failure to fully engage stakeholders (e.g. letting a pen-pusher make long term hiring decisions) have no place.

I prefer disruption - and wish the same for others. High unemployment rates have many causes (yes, fiscal policy & financial events are tough); one of these causes is that too many people are unimaginative in assuming new roles, creating new stuff, registering new businesses, networking with the big boys or travelling to wherever the opportunities are.

"I don't understand why anyone would want to work with a business that employs HR people"

Because that's all they have?

Starting a business is NOT an easy thing. In most parts of the economy, it's expensive and risky (and that's not even counting many of the barriers to entry that bigger companies push for lawmakers to add to the books), and a lot of people simply can't afford it.

Hell, most people probably don't even know of any companies that don't have any. Certainly I'd be hard pressed to name any in my field (Chemistry) that don't have an HR department.

I remain convinced that communication technologies make it far easier to measure your personal performance in everything you do - you can measure the time spent doing everything you do on a computer (and upload metrics to cloud services); upload screenshots; track your movements; track your time spent talking to people (sortable by category, purpose, communication objectives...); collect feedback on your interactions with people; record your own feedback on interactions; write task maps & track progress along them; track & categorise all financial transactions; collaborate live with any place in the world (Google docs in real time, Google+ conferences), etc.

If you get into the habit of using productivity tools & metrics in everything you do (personal life as well as projects you work on), you'll find it easy to extend them into professional life. And you'll be able to tutor your colleagues or staff for doing the same. That, combined with face-to-face discussions, internal transparency, and recruitment innovations such as "trial periods"/ internships, make HR superfluous.

That's not entirely true - in larger organisations, I like the Zappos style of employing people who's job it is to make other employees happy & engaged in their workplace. But I detest the old civil service cult of written policies, arbitrary signals or giving rule-following non-thinkers a key responsibility over the sourcing & retention of skilled & motivated employees. It's obviously not efficient in any industry; while this may have been the best policy available in the 1980s, today we can form far better assessments of employee competences, internal/ external interactions, role fulfilment & real professional achievements.

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The "chemistry industry" is pretty broad - that could encompass chemical engineering, hydrocarbons, genetics, pharmaceuticals, solvents, catalyst development or any one of a thousand different areas. If you're focus is on fundamental research, you are probably dependent exclusively (whether directly, indirectly, or through tied tax deductions for corporate R&D) on government grants & subsidies. That makes your situation tough - unless you can build an organisation which is eligible for (and successful at extracting) this kind of funding, then it isn't at all obvious how you could proceed (mere eligibility, combined with a demonstrably more efficient use of resources, might suffice - who knows?).

On the other hand, if your focus were on finding & exploiting novel applications of results from chemistry research, in particular parts of industry where there is enormous potential for direct added value in existing commercial processes, you would have real prospects (especially if you can organise a critical mass of collaborators with deep subject knowledge, strong motivation or applicable competences).

I'm sure that there are opportunities open to all of us - it is our tendency to fall into routine patterns of behaviour (and to mimic behaviours of those around us/ establishment) that is the biggest barrier to progress (obviously, it works well for most people most of the time - but we become trapped in local optima rather than pursuing something akin to global optimisation of our behaviour. Sometimes, taking the plunge and eating search costs is worthwhile).

young people to remain unemployed for long periods of time because they are unemployable (Because no work experience

This has definitely puzzled me as well. I can understand wanting to hire someone who has the skills to do the job but if such a person is not available, why in the world wouldn't you hire someone who is capable of being trained and then train them. I get it that education is poor right now but in my experience there are not that many jobs, even at the highest level, that require great mental abilities. Most jobs are not rocket science. Even the most mediocre people seem to be able to work and make decisions. The basis of most businesses are not that complicated. It is rather the challenge of coordination of million common sense decisions into one organization. Cynicism aside, what ever happened to job training? I would much rather hire someone who is smart and capable and mold them to exactly my needs than a second rate candidate who happens to have already been trained by someone else. Puzzling.

We have needed, and we still need jobs fiscal stimulus. We have a neglected infrastructure that will cost much more to replace than to repair and maintain. It is madness not to make that investment when money is nearly free and unemployment is so high. How can ideology be so impervious to sense?

If you imagine that there is some fixed pot of money out there, I'd say you're not too clear on how the economy, and especially the banking system, work. Do you really understand the difference between consumption and investment? The way we increase the pot is by investing, because a useful investment returns more than it cost. We have been eroding our capital base by a protracted neglect of our infrastructure.

bampbs: "We have a neglected infrastructure that will cost much more to replace than to repair and maintain."
Okay, I'll bite. Give me an example of neglected infrastructure that would be cheaper to maintain (and isn't currently being maintained) that will be more expensive to replace?
My neighbourhood in the US is full of "infrastructure projects" that employ huge crews of workers, but come into the "dig a hole and then refill it" category. This isn't the 1930's, when there was a genuine need for new motorways and bridges that would enable new commerce. Current "infrastructure projects" are nearly all port-barrel funding for political re-election campaigns.

@bampbs The only thing to clarify is that the job that once took 50 shovels now takes about 3; and the number of workers exceeded the no. of jobs. In other words; We are upside down on that now. Not to mention the loss of educated consumers due to population decline in the middle part of the economy. We need a quantum paradigm socialization shift which the Right will never tolerate even if they have to kill people.

"Investment" is just a particular subset of current consumption. There may not be a limited pot of money, but there is a limited pot of real resources in the short term. The more resources the government gives away via transfer payments, the harder it will be to find resources to build roads, fly the spaceshuttle, or do whatever else the government might do, and the fewer resources there will be for private consumption.